As of August 2024, Russia's economy is showing a mix of growth and underlying stress. The country's GDP grew by 4.6% in the first half of 2024, supported by robust domestic demand and government spending, particularly on military-related activities. Unemployment is low, at around 2.4%, which suggests a tight labor market.
However, this growth comes with significant challenges. Russia is experiencing high inflation, partly driven by increased consumer spending as people seek to convert savings into real assets like real estate, wary of the financial system's stability. The ongoing war in Ukraine and extensive sanctions have pushed Russia to rely on parallel imports and import substitution, leading to technological regression and inefficiencies in the economy.
Moreover, the Russian economy is at risk of overheating, with mounting inefficiencies and the misallocation of resources exacerbated by the war effort. The financial system is under strain, and while consumer spending is keeping the economy afloat, the long-term sustainability of this growth is questionable due to rising inflation and potential financial instability.
In summary, while Russia's economy is currently growing, it faces significant risks related to inflation, inefficiency, and the potential for future financial instability